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— Satish H.

Dr K. Ramakrishnan, Chairman and Managing Director of Andhra Bank (right), with Mr Kalyan Mukherjee, Executive Director, at a press conference in Hyderabad on Friday.

Our Bureau

Hyderabad, April 25 Andhra Bank’s net profit dropped by 10.46 per cent at Rs 124.25 crore in the fourth quarter of the financial year ended March 2008 compared to Rs 138.77 crore in the corresponding quarter of the previous fiscal.

The impact of the stock market fall on its equity portfolio of Rs 200 crore and adverse impact of inflation on bond market yields had hit the bank’s profitability hard in the quarter, Dr K. Ramakrishanan, Chairman and Managing Director, Andhra Bank, told newspersons here on Friday.

What saved the bank from the fourth quarter blues was, however, a 110 per cent rise in the fee-based income at Rs 84.76 crore driven by business from its bancassurance channel.

For the full year 2007-08, net profit has gone up by 7 per cent to Rs 575.57 crore (Rs 537.90 crore) backed by increase in total business to Rs 83,993 crore.

The board of directors of the bank, at its meeting held here on Friday, has recommended a final dividend of 20 per cent in addition to interim dividend of 20 per cent paid already for the year 2007-08.

A 600 basis points reduction in the retail margins of the bank also impacted the profitability. “This is because the rates of interests were reduced in three different instances in the last fiscal. We also had to pay higher rate of interest on some deposits and some bulk deposits mobilised in March 2007,” the CMD explained.

The cost of funds, as a result, had gone up to 5.76 per cent from 4.63 per cent in the previous year. The bank would focus on corporate credit, followed by lending to agriculture and small and medium enterprises this year as a strategy to the profitability while continuing to lend to the essential sub-segments of the retail sector.

“We are expecting the credit growth to pick up this year due to a variety of reasons such as grounding of many projects. We will be crossing the one lakh crore business this year with 23 and 20 per cent growth in deposits and credit respectively, he added.

More Stories on : Financial Performance | Public Sector Banks

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